BRFS Gears Up for Q3 Earnings: Here's What You Should Know

Post Holdings, Inc. POST is likely to register top-line growth when it reports fourth-quarter fiscal 2024 earnings on Nov. 14 after the market closes. The Zacks Consensus Estimate for revenues is pegged at $1.96 billion, implying a 0.8% increase from the prior-year quarter’s reported figure. The consensus mark for earnings has remained unchanged in the past 30 days at $1.19 per share, indicating a decline of almost 27% from the figure reported in the year-ago quarter. POST has a trailing four-quarter earnings surprise of 30.1%, on average.

Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.

Things to Consider Ahead of POST’s Upcoming Results

Post Holdings is being driven by strategic initiatives and a strong performance in its Post Consumer Brands segment. The company has been benefitting from carryover pricing and operational efficiencies, particularly in the pet food and grocery divisions, which have been supported by strong manufacturing capabilities. The Zacks Consensus Estimate for Post Consumer Brands segment sales is currently pegged at $1,034.9 million, indicating an increase from the $1,008 million reported in the same period last year.

Strategic acquisitions like Perfection Pet have played a key role in Post Holdings' growth. These factors are likely to drive results in the upcoming quarter.

Post Holdings, Inc. Price, Consensus and EPS Surprise

Post Holdings, Inc. price-consensus-eps-surprise-chart | Post Holdings, Inc. Quote

However, Post Holdings has been battling rising selling, general and administrative expenses due to high marketing investments. Also, soft sales in its Refrigerated Retail unit, impacted by heightened trade promotions and a shift in its product portfolio toward dinner sides, have been areas of concern. The consensus mark for fourth-quarter Refrigerated Retail sales presently stands at $225 million compared with $233.3 million reported in the same period last year.

Earnings Whispers for POST

Our proven model doesn’t conclusively predict an earnings beat for Post Holdings this time. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat, which is not the case here.

Post Holdings carries a Zacks Rank #4 (Sell) and has an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Stocks With the Favorable Combination

Here are some companies worth considering, as our model shows that these have the correct combination to beat on earnings this time.

CAVA Group, Inc. CAVA currently has an Earnings ESP of +3.38% and a Zacks Rank of 2 at present. The company is likely to register top and bottom-line growth when it reports third-quarter 2024 results. The Zacks Consensus Estimate for CAVA’s quarterly revenues is pegged at $235.1 million, which indicates growth of 33.9% from the figure reported in the prior-year quarter. You can see the complete list of today’s Zacks #1 Rank stocks here.

The consensus estimate for CAVA Group’s earnings is pegged at 11 cents per share, calling for 83.3% growth from the year-ago quarter. CAVA has a trailing four-quarter earnings surprise of 257.7%, on average.

Ollie's Bargain Outlet Holdings, Inc. OLLI currently has an Earnings ESP of +1.50% and a Zacks Rank of 3. OLLI's top line is anticipated to increase year over year when it reports third-quarter fiscal 2024 results. The Zacks Consensus Estimate for its quarterly revenues is pegged at $519 million, which implies 8.1% growth from the year-ago quarter’s reported figure.

The company is expected to register an increase in the bottom line. The consensus estimate for Ollie's Bargain’s third-quarter earnings is pegged at 57 cents per share, indicating 11.8% growth from the year-ago quarter. OLLI has a trailing four-quarter earnings surprise of 7.9%, on average.

Jack in the Box Inc. JACK has an Earnings ESP of +0.76% and a Zacks Rank of 3. The company is likely to register a top-line decline when it reports fiscal fourth-quarter fiscal 2024 results. The Zacks Consensus Estimate for JACK’s quarterly revenues is pegged at $357.9 million, which indicates a dip of 3.9% from the figure reported in the prior-year quarter.

The consensus estimate for Jack in the Box’s quarterly earnings has declined by 3 cents over the past 30 days to $1.12 per share. The figure calls for growth of 2.8% from the year-ago quarter’s number. JACK delivered an average earnings surprise of 1.7% in the trailing four quarters.

Zacks Investment Research

Spectrum Brands Holdings, Inc. SPB is expected to register top and bottom-line decline when it reports fourth-quarter fiscal 2024 results on Nov. 15, before the opening bell. The Zacks Consensus Estimate for SPB’s fiscal fourth-quarter revenues is pegged at $740.1 million, indicating a decline of 1% from the year-ago quarter.

Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.

The Zacks Consensus Estimate for Spectrum Brands’ fiscal fourth-quarter earnings per share (EPS) is pegged at $1.13 per share, indicating a decline of 16.9% from the figure reported in the year-ago quarter. The consensus mark for EPS has moved down 1.7% in the past 30 days.

In the last reported quarter, the company delivered a negative earnings surprise of 18.5%. SPB has recorded an earnings surprise of 95.8% in the trailing four quarters, on average.

What the Zacks Model Unveils for SPB

Our proven model does not conclusively predict an earnings beat for Spectrum Brands this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here. You can uncover the best stocks before they’re reported with our Earnings ESP Filter.

Spectrum Brands has an Earnings ESP of +10.13% and a Zacks Rank #4 (Sell).

Trends to Watch for SPB's Q4 Eaarnings

Spectrum Brands’ fourth-quarter fiscal 2024 results are expected to benefit from pricing actions, cost efficiencies, volume-driven return across all three segments and a favorable product mix, all of which are expected to have contributed to improved margins. The company’s proactive cost-cutting measures, initiated in the second half of fiscal 2022, include permanent reductions in salaried headcount and cuts to advertising and promotional spending, resulting in a more disciplined cost structure. Gains from these are expected to have aided gross margin in the to-be-reported quarter.

Additionally, the company’s fiscal fourth quarter is expected to reflect gains from the Global Productivity Improvement Plan (GPIP), innovations, and strategic transformation efforts. The ongoing GPIP plan focuses on enhancing operational efficiency and reinvesting savings into growth initiatives like innovation, brand advertising and research and development (R&D).

A significant portion of the savings from this strategy is expected to be reinvested into growth initiatives, consumer insights, R&D and marketing across all business segments. This plan aims to drive value creation and ensure sustainable long-term growth for the company.

To drive top-line growth, Spectrum Brands increased its investments in brand advertising and innovation by approximately $23 million year over year and is on track to invest an additional $50 million in fiscal 2024. These investments are aimed at strengthening its market presence.

Spectrum Brands Holdings Inc. Price and EPS Surprise

Spectrum Brands Holdings Inc. price-eps-surprise | Spectrum Brands Holdings Inc. Quote

The company has been witnessing robust growth in the e-commerce and brick-and-mortar channels. SPB has been streamlining its organizational structure. Such strengths are likely to have aided the bottom-line performance. Its Home & Personal Care segment is expected to have benefited from solid e-commerce growth fueled by savvy digital marketing. On the last reported quarter’s earnings call, management remained optimistic about the upward trajectory of its e-commerce business, with strong recovery noted in small kitchen appliances and global aquatics.

We note that the Zacks Consensus Estimate for SPB’s Home & Personal Care segment’s sales is pegged at $316 million for fourth-quarter fiscal 2024, down 2.1% year over year. The consensus estimate for Global Pet Care segment revenues indicates 3.1% year-over-year growth to $301 million, while Home & Garden segment revenues are pegged at $129 million, implying 3.2% growth year over year.

However, soft demand for small kitchen appliances, volume declines in certain pet channels, and the impact of SKU rationalizations might have continued to act as deterrents. The company has been grappling with geopolitical and macroeconomic uncertainty for a while now. In addition, foreign currency translations are acting as headwinds. These limitations are expected to have hurt the top line in the fiscal third quarter.

SPB Stock’s Price Performance & Valuation Picture

From a valuation perspective, Dillard’s is trading at a premium relative to industry benchmarks. With a forward 12-month price-to-earnings ratio of 14.89X, which is below the five-year high of 57.4X but higher than the Consumer Products – Discretionary industry’s average of 13.22X.

The recent market movements show that SPB’s shares have gained 4.4% in the past three months against the industry's 16.8% decline.

Arcos Dorados Holdings Inc. ARCO is scheduled to report third-quarter 2024 results on Nov. 13.

ARCO’s Q3 Estimates

The Zacks Consensus Estimate for earnings is pegged at 16 cents per share, down 46.7% year over year. In the past 30 days, earnings estimates have remained stable. The consensus mark for revenues is pegged at $1.11 billion, down 0.4% year over year.

Find the latest EPS estimates and surprises on Zacks Earnings Calendar.

Factors to Note Ahead of ARCO’s Q3 Release

Arcos Dorados’ upcoming quarterly results are likely to be hurt by high costs and weakened consumer demand. The dismal performance in Argentina is likely to have hurt the company’s top line. ARCO continues to invest heavily in its digital and IT infrastructure, including restaurant-level digital tools, which is likely to have increased operational expenses. These investments aim to improve long-term efficiency and customer experience but might have increased short-term costs.

Rising costs in areas such as labor, utilities and IT are likely to have impacted margins across ARCO’s key markets. Mexico, in particular, might have experienced higher payroll expenses due to wage inflation.

Robust comparable sales, expansion efforts as well as strong performance in Brazil and the North Latin America’s divisions bode well. The company is likely to have witnessed positive guest traffic in the quarter to be reported. Robust digital sales are anticipated to have aided ARCO's quarterly performance.

Arcos Dorados Holdings Inc. Price and EPS Surprise

Arcos Dorados Holdings Inc. price-eps-surprise | Arcos Dorados Holdings Inc. Quote

What Our Model Says for ARCO

Our proven model doesn’t conclusively predict an earnings beat for Arcos Dorados this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. This is not the case here.

ARCO’s Earnings ESP: Arcos Dorados has an Earnings ESP of 0.00% at present. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank of ARCO: Arcos Dorados currently carries a Zacks Rank #4 (Sell).

Stocks With Favorable Combination

Here are three companies you may want to consider as our model shows that these have the right combination of elements to post an earnings beat this reporting cycle:

CAVA Group, Inc. CAVA currently has an Earnings ESP of +3.38% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for EPS is pegged at 11 cents, which implies an increase of 83.3% from the prior-year actuals. The Zacks Consensus Estimate for quarterly revenues is pegged at $234.9 million, which indicates a rise of 33.8% from the year-earlier levels. CAVA has a trailing four-quarter earnings surprise of 257.7%, on average.

Ollie's Bargain OLLI currently has an Earnings ESP of +1.50% and a Zacks Rank of 3. The Zacks Consensus Estimate for quarterly EPS of 57 cents implies an increase of 11.8% from the year-ago reported number.

The Zacks Consensus Estimate for quarterly revenues is pegged at $519 million, implying a jump of 8.1% from the prior-year quarter. OLLI has a trailing four-quarter earnings surprise of 7.9%, on average.

Darden Restaurants, Inc. DRI currently has an Earnings ESP of +0.07% and a Zacks Rank #3. The Zacks Consensus Estimate for DRI’s quarterly revenues is pegged at $2.86 billion, which implies a rise of 4.9% from the prior-year quarter’s reported figure.

The Zacks Consensus Estimate for DRI’s quarterly earnings has remained unchanged at $2.06 per share in the past 30 days, which indicates a 12% increase from the year-ago quarter’s reported number. DRI has a trailing four-quarter earnings surprise of 1.3%, on average.

Zacks Investment Research

TreeHouse Foods, Inc. THS is likely to register top and bottom-line growth when it reports third-quarter 2024 earnings on Nov. 12. The Zacks Consensus Estimate for revenues is pegged at $879.9 million, implying a 1.9% increase from the prior-year quarter’s reported figure. The consensus mark for earnings has remained unchanged in the past 30 days at 74 cents per share, indicating an increase of 29.8% from the figure reported in the year-ago quarter. THS has a trailing four-quarter earnings surprise of 25.1%, on average.

Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.

Things to Consider Ahead of THS’ Upcoming Results

TreeHouse Foods' private label products have consistently gained market share over the past two decades, and with grocery retailers making strategic investments in private brands, the company stands to benefit significantly. The elevated price gaps between national and private brands support continued growth in the private label sector.

The company has been benefiting from successful execution in categories such as cookies, refrigerated dough, pretzels and pickles, along with strategic investments and an expanding net sales pipeline. This strong market positioning is expected to have driven volumes and profits in the quarter under review. The company expects volume contributions from recent acquisitions in the coffee and pretzel sectors undertaken in the first half of the year.

TreeHouse Foods, Inc. Price, Consensus and EPS Surprise

TreeHouse Foods, Inc. price-consensus-eps-surprise-chart | TreeHouse Foods, Inc. Quote

However, THS has been battling supply-chain headwinds for a while now. In the second quarter of 2024, operations and supply-chain-related challenges served as a headwind of $3 million due to increased labor costs and the broth facility restoration effect. High operating expenses and the inflated cost of inputs like cocoa are also a concern.

Nonetheless, the company has been committed to implementing the TreeHouse Management Operating System and other supply-chain initiatives aimed at enhancing execution, margin performance and enriching ties with customers. TreeHouse Foods expects gross cost savings of nearly $50 million in the latter half of the year and anticipates margin expansion in the second half of 2024. This bodes well for the quarter to be reported.

Earnings Whispers for THS

Our proven model doesn’t conclusively predict an earnings beat for TreeHouse Foods this time. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat, which is not the case here.

TreeHouse Foods carries a Zacks Rank #3 and has an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Stocks With the Favorable Combination

Here are some companies worth considering, as our model shows that these have the correct combination to beat on earnings this time.

CAVA Group, Inc. CAVA currently has an Earnings ESP of +3.38% and a Zacks Rank of 2 at present. The company is likely to register top and bottom-line growth when it reports third-quarter 2024 results. The Zacks Consensus Estimate for CAVA’s quarterly revenues is pegged at $235.1 million, which indicates growth of 33.9% from the figure reported in the prior-year quarter. You can see the complete list of today’s Zacks #1 Rank stocks here.

The consensus estimate for CAVA Group’s earnings is pegged at 11 cents per share, indicating 83.3% growth from the year-ago quarter. CAVA has a trailing four-quarter earnings surprise of 257.7%, on average.

Ollie's Bargain Outlet Holdings, Inc. OLLI currently has an Earnings ESP of +1.50% and a Zacks Rank of 3. OLLI's top line is anticipated to increase year over year when it reports third-quarter fiscal 2024 results. The Zacks Consensus Estimate for its quarterly revenues is pegged at $519 million, which implies 8.1% growth from the year-ago quarter’s reported figure.

The company is expected to register an increase in the bottom line. The consensus estimate for Ollie's Bargain’s third-quarter earnings is pegged at 57 cents per share, indicating 11.8% growth from the year-ago quarter. OLLI has a trailing four-quarter earnings surprise of 7.9%, on average.

Jack in the Box Inc. JACK has an Earnings ESP of +1.28% and a Zacks Rank of 3. The company is likely to register a top-line decline when it reports fiscal fourth-quarter fiscal 2024 results. The Zacks Consensus Estimate for JACK’s quarterly revenues is pegged at $357.9 million, which indicates a dip of 3.9% from the figure reported in the prior-year quarter.

The consensus estimate for Jack in the Box’s quarterly earnings has declined by 2 cents over the past 30 days to $1.12 per share. The figure calls for growth of 2.8% from the year-ago quarter’s number. JACK delivered an average earnings surprise of 1.7% in the trailing four quarters.

Zacks Investment Research

Earnings are arguably the most important single number on a company's quarterly financial report. Wall Street clearly dives into all of the other metrics and management's input, but the EPS figure helps cut through all the noise.

We know earnings results are vital, but how a company performs compared to bottom line expectations can be even more important when it comes to stock prices, especially in the near-term. This means that investors might want to take advantage of these earnings surprises.

Now that we know how important earnings and earnings surprises are, it's time to show investors how to take advantage of these events to boost their returns by utilizing the Zacks Earnings ESP filter.

The Zacks Earnings ESP, Explained

The Zacks Earnings ESP, or Expected Surprise Prediction, aims to find earnings surprises by focusing on the most recent analyst revisions. The basic premise is that if an analyst reevaluates their earnings estimate ahead of an earnings release, it means they likely have new information that could possibly be more accurate.

The core of the ESP model is comparing the Most Accurate Estimate to the Zacks Consensus Estimate, where the resulting percentage difference between the two equals the Expected Surprise Prediction. The Zacks Rank is also factored into the ESP metric to better help find companies that appear poised to top their next bottom-line consensus estimate, which will hopefully help lift the stock price.

When we join a positive earnings ESP with a Zacks Rank #3 (Hold) or stronger, stocks posted a positive bottom-line surprise 70% of the time. Plus, this system saw investors produce roughly 28% annual returns on average, according to our 10 year backtest.

Stocks with a ranking of #3 (Hold), or 60% of all stocks covered by the Zacks Rank, are expected to perform in-line with the broader market. Stocks with rankings of #2 (Buy) and #1 (Strong Buy), or the top 15% and top 5% of stocks, respectively, should outperform the market; Strong Buy stocks should outperform more than any other rank.

Should You Consider Walmart?

Now that we understand what the ESP is and how beneficial it can be, let's dive into a stock that currently fits the bill. Walmart (WMT) earns a #2 (Buy) right now and its Most Accurate Estimate sits at $0.54 a share, just 11 days from its upcoming earnings release on November 19, 2024.

Walmart's Earnings ESP sits at +1.61%, which, as explained above, is calculated by taking the percentage difference between the $0.54 Most Accurate Estimate and the Zacks Consensus Estimate of $0.53. WMT is also part of a large group of stocks that boast a positive ESP. Make sure to utilize our Earnings ESP Filter to uncover the best stocks to buy or sell before they've reported.

WMT is just one of a large group of Retail and Wholesale stocks with a positive ESP figure. Jack In The Box (JACK) is another qualifying stock you may want to consider.

Jack In The Box, which is readying to report earnings on November 20, 2024, sits at a Zacks Rank #3 (Hold) right now. It's Most Accurate Estimate is currently $1.13 a share, and JACK is 12 days out from its next earnings report.

For Jack In The Box, the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $1.12 is +0.76%.

Because both stocks hold a positive Earnings ESP, WMT and JACK could potentially post earnings beats in their next reports.

Find Stocks to Buy or Sell Before They're Reported

Use the Zacks Earnings ESP Filter to turn up stocks with the highest probability of positively, or negatively, surprising to buy or sell before they're reported for profitable earnings season trading. Check it out here >>

Zacks Investment Research

Potbelly (PBPB) came out with quarterly earnings of $0.08 per share, beating the Zacks Consensus Estimate of $0.05 per share. This compares to earnings of $0.04 per share a year ago. These figures are adjusted for non-recurring items.

This quarterly report represents an earnings surprise of 60%. A quarter ago, it was expected that this sandwich restaurant operator would post earnings of $0.05 per share when it actually produced earnings of $0.08, delivering a surprise of 60%.

Over the last four quarters, the company has surpassed consensus EPS estimates three times.

Potbelly, which belongs to the Zacks Retail - Restaurants industry, posted revenues of $115.12 million for the quarter ended September 2024, surpassing the Zacks Consensus Estimate by 1.61%. This compares to year-ago revenues of $120.77 million. The company has topped consensus revenue estimates three times over the last four quarters.

The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call.

Potbelly shares have lost about 19.3% since the beginning of the year versus the S&P 500's gain of 24.3%.

What's Next for Potbelly?

While Potbelly has underperformed the market so far this year, the question that comes to investors' minds is: what's next for the stock?

There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately.

Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions.

Ahead of this earnings release, the estimate revisions trend for Potbelly: unfavorable. While the magnitude and direction of estimate revisions could change following the company's just-released earnings report, the current status translates into a Zacks Rank #4 (Sell) for the stock. So, the shares are expected to underperform the market in the near future. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

It will be interesting to see how estimates for the coming quarters and current fiscal year change in the days ahead. The current consensus EPS estimate is $0.06 on $114.7 million in revenues for the coming quarter and $0.20 on $458.9 million in revenues for the current fiscal year.

Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, Retail - Restaurants is currently in the top 29% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1.

One other stock from the same industry, Cava Group (CAVA), is yet to report results for the quarter ended September 2024. The results are expected to be released on November 12.

This Mediterranean restaurant chain is expected to post quarterly earnings of $0.11 per share in its upcoming report, which represents a year-over-year change of +83.3%. The consensus EPS estimate for the quarter has been revised 14.3% higher over the last 30 days to the current level.

Cava Group's revenues are expected to be $235.13 million, up 33.9% from the year-ago quarter.

Zacks Investment Research